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What has changed for the new tax year?

The new tax year starts on 6th April. This is often the date that new tax rates and rules come into force, so what does the new tax year have in store for you and your business?

By Catherine Heinen, FCCA

Tax planning helps to ensure your business runs effectively and you benefit from tax changes. Talking to an accountant can help you know about changes early and make sure you're planning for taxes effectively.

Class 1 National Insurance Contribution (NIC) employee rate reduced

The main rate of Class 1 NICs will go down again from 6th April 2024, following a reduction in January of this year. The NIC rate applicable for workers earning between £12,570 and £50,270 will be 8% from 6th April 2024. The higher employee NIC rate of 2% on earnings above £50,270 remains unchanged.

The employer NIC rate remains at 13.8% on earnings.

Class 2 National Insurance Contribution (NIC) abolished

From 6th April 2024, sole traders with profits over £12,570 will no longer need to pay Class 2 NIC payments. Those individuals will still be entitled to contributory benefits.

Sole traders with profits between £6,725 and £12,570 will keep their entitlement to contributory benefits. Sole traders with profits under £6,725 can pay voluntary NIC to access contributory benefits, as is currently the case.

Class 4 National Insurance Contribution (NIC) rate reduced

The main rate of Class 4 NIC, payable by self-employed individuals, will reduce to 6% on profits between £12,570 and £50,270 from 6th April 2024. The class 4 NIC rate remains at 2% on profits over £50,270.

Capital Gains Tax (CGT) Annual Exempt Amount (AEA) reduction

The amount of chargeable gains that can be made before tax is due, known as the Annual Exempt Amount, will reduce from 6th April 2024 to £3,000 for individuals and personal representatives and £1,500 for most trustees.

Capital Gains Tax (CGT) rate reduced

The Capital Gains Tax rate on residential property disposals for individuals who pay tax at a higher rate, trustees and personal representatives, will reduce to 24% from 6th April 2024.

There is no change to the lower rate of CGT for basic rate taxpayers on residential property disposals, which remains at 18%.

VAT thresholds increased

The threshold for registering for VAT will be increase to a taxable turnover of £90,000 from 1st April 2024. Businesses making less than £88,000 will be able to apply for de-registration from the VAT scheme from 1st April 2024.

Dividend allowance reduction

From 6th April 2024, the dividend allowance will reduce to £500. This is the amount of dividends that an individual can receive before paying tax on dividends.

ISA rule changes

From 6th April 2024, individuals will be able to pay into more than one type of ISA. Savers will also be able to move funds easier between providers in search of higher returns on investment.

The annual ISA limit is £20,000, which includes a limit of £4,000 for a Lifetime ISA. A consultation into a new UK ISA is also underway which will give individuals an additional £5,000 ISA limit.

High Income Child Benefit Charge (HICBC) threshold change

The threshold for the HICBC is increasing to £60,000 from 6th April 2024. This means individuals earning below this amount will not need to pay any tax on their child benefit income.

The taper rate has also been halved, meaning individuals earning between £60,000 and £80,000 will be liable to a tax charge. Those earning above £80,000 will need to pay a tax charge equal to their child benefit income.

The HICBC rules will continue to be based on individual income, but plans to make the system fairer will look at using household income from April 2026.

National Minimum Wage and National Living Wage

From 1st April 2024, the new National Minimum Wage and changes to the National Living Wage will apply. From 1st April 2024 the National Living Wage is applicable to workers aged 21 and over.

	Rate from April 2024
National Living Wage	£11.44
18-20 Year Old Rate	£8.60
Under 18 Rate	£6.40
Apprentice Rate	£6.40

Scottish advance rate for income tax introduced

The Scottish Budget 2024-25 introduced a new income tax band for Scottish taxpayers from 6th April 2024. The advance rate of tax is 45% and is applicable on income between £75,001 and £125,140.

Scottish top income tax rate increased

The top rate of tax for Scottish taxpayers, applicable to earnings over £125,140, has increased to 48% from 47% from 6th April 2024.

How can TaxAssist Accountants help?  

Our proactive and experienced team at TaxAssist Accountants can help you with your tax planning needs effectively. To discuss your options further, speak to our expert team today on telephone or use our online contact form.  

Date published 25 Mar 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Catherine Heinen, FCCA

Catherine is a Technical Content Writer at TaxAssist Accountants, and a qualified accountant. With experience working at two accountancy practices in the UK top 50 accountancy firms according to Accountancy Age, Catherine has significant experience in accounts, tax returns and advising clients. Catherine ensures businesses, business owners and individuals are kept up to date and informed by providing concise and informative technical material.

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